United States Gypsum Co. v. Mayor of Baltimore

647 A.2d 405, 336 Md. 145, 1994 Md. LEXIS 119
CourtCourt of Appeals of Maryland
DecidedSeptember 12, 1994
DocketNo. 127
StatusPublished
Cited by90 cases

This text of 647 A.2d 405 (United States Gypsum Co. v. Mayor of Baltimore) is published on Counsel Stack Legal Research, covering Court of Appeals of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States Gypsum Co. v. Mayor of Baltimore, 647 A.2d 405, 336 Md. 145, 1994 Md. LEXIS 119 (Md. 1994).

Opinion

ELDRIDGE, Judge.

This appeal arises out of a products liability action brought in 1984 by the Mayor and City Council of Baltimore (“the City”) in the Circuit Court for Baltimore City, against manufacturers, distributors and installers of asbestos-containing building materials. The City sought damages against, inter alia, manufacturer United States Gypsum Co., installer Hampshire Industries, Inc., and manufacturer/distributor Asbestospray Corp., for the cost of discovering, managing, rectifying the effects of, and removing asbestos-containing surface treatment products.1 No personal injury damages were sought in the action.

[153]*153Trial began in the present Group I proceeding on January 9, 1992. On June 5, 1992, the jury returned special verdicts in favor of the plaintiff based on alternative theories of negligence, strict liability under § 402A of the Restatement (Second) of Torts,2 and breach of implied and express warranties.3 The jury decided that the City was entitled to compensatory damages from the three defendants totaling $17,208,807.14. Specifically, the jury awarded compensatory damages against Asbestospray in the amount of $8,333,183.81, against United States Gypsum in the amount of $8,161,637.22, and against Hampshire in the amount of $713,986.11. The amounts of these compensatory damages awards were identical under all theories of recovery relied on by the City.

Hampshire had cross-claimed for indemnity against United States Gypsum, and, pursuant to an agreement between the two parties, an order was entered for United States Gypsum to indemnify Hampshire in the amount of the judgment against Hampshire in the Group I proceeding. The jury additionally determined that punitive damages should be awarded against United States Gypsum in the amount of $4,000,000, and against Asbestospray in the amount of $2,000,000. On August 11, 1992, the circuit court issued an order directing the entry of a final judgment pursuant to Maryland Rule 2-602 for the Group I proceeding, and final judgment was entered.4

[154]*154The defendants timely noted appeals to the Court of Special Appeals, and this Court issued a writ of certiorari prior to consideration of the case by the intermediate appellate court. Shortly thereafter, the three defendants filed motions in this Court to “vacate” the circuit court’s order directing the entry of final judgment pursuant to Rule 2-602, arguing that the trial judge abused “his Rule 2—602(b) discretion.” Finding no abuse of discretion, this Court on March 18, 1993, denied the motions to vacate. Subsequent to briefing and oral argument in this Court, United States Gypsum and Hampshire Industries entered into settlement agreements with the City and dismissed their appeals, leaving Asbestospray as the sole defendant in this Group I appeal.

The Asbestospray Corporation was established in 1949 for the purpose of marketing and distributing the sprayed fiber products of the Asbestos Products Manufacturing Co., formed in 1947. Both companies were closely-held by members of the same family, and the businesses operated out of the same premises.5

[155]*155The Asbestospray product is an asbestos-containing spray-on fireproofing that was installed in the six City buildings at issue in this appeal between 1956 and 1971. The greatest part of the compensatory damages award against Asbestospray represented $8,016,442.33 in costs to the City associated with rectifying the effects of and the complete removal of approximately 350,000 square feet of Asbestospray’s fireproofing from Walbrook Senior High School. The asbestos fireproofing in Walbrook Senior High School had deteriorated, and had contaminated furniture, equipment and books in the school. Consequently, the City was required to pay for the cleaning and storage of each piece of furniture, equipment, and all books, and then to remove all asbestos fireproofing from the building. The remainder of the damages against Asbestospray comprised the cost of removing some or all of the asbestos-containing fireproofing located in the five other buildings at issue in this appeal, as well as the cost of operations and management programs for that asbestos which still remains.

Asbestospray raises numerous issues on appeal, and additional facts will be set forth in the particular parts of this opinion to which those facts specifically relate.6

[156]*156I.

A threshold matter concerns the availability of negligence and § 402A strict liability tort remedies in an action by a property owner seeking only property damages because of a defect in a product which the owner had purchased. The compensatory damages which the City sought and recovered were for the cost of discovering, managing, rectifying the effects of, and removing the defective product, namely the asbestos-containing building material.

Traditionally, in cases to recover damages because of defective products, the loss of value or use of the product itself, and the cost to repair or replace the product, have usually been viewed as economic losses. See Decoster v. Westinghouse, 333 Md. 245, 250-251, 634 A.2d 1330, 1332-1333 (1994); 2 M. Stuart Madden, Products Liability § 22.21, at 334 (2d ed. 1988); William L. Prosser, The Law of Torts § 101, at 665 (4th ed. 1971); Comment, Manufacturer’s Liability to Remote Purchasers for “Economic Loss” Damages— Tort or Contract?, 114 U.Pa.L.Rev. 539 (1966). Tort recovery for purely economic losses has ordinarily not been allowed. Instead, a purchaser suffering only economic loss because of a defective product will normally be limited to contract causes of action, including breach of implied and express warranties, and, in the case of fraud, to an action for deceit. Decoster v. Westinghouse, supra, 333 Md. at 250, 634 A.2d at 1332; Prosser, supra, § 107, at 708.

As previously indicated, in this case the greater part of the damages against Asbestospray was for the removal of the defective fireproofing from the Walbrook Senior High School, costs normally recoverable only by a contract action. Nevertheless, in the circumstances here, we hold that the City’s tort claims for compensatory damages in this asbestos action are fully cognizable.

Even where a recovery, based on a defective product, is considered to be for economic loss, a plaintiff may still recover in tort if the defect creates a substantial and unrea[157]*157sonable risk of death or personal injury. This legal principle was firmly established in Maryland by Council of Co-Owners v. Whiting-Turner, 308 Md. 18, 517 A.2d 336 (1986), in which we upheld a negligence action to recover the cost of correcting a dangerous condition allegedly created by the failure of a general contractor and certifying architects to construct a ten-story condominium with the proper fire resistant materials. No fire had yet occurred, and the builder and architects sought to defend, in part, on the ground that the plaintiff council of unit owners had suffered only economic loss. 308 Md. at 24, 517 A.2d at 339. This Court, in an opinion by Judge McAuliffe, refused to penalize the plaintiffs for “the fortuitous circumstance of the nature of the resultant damage.” 308 Md. at 35, 517 A.2d at 345.

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Bluebook (online)
647 A.2d 405, 336 Md. 145, 1994 Md. LEXIS 119, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-gypsum-co-v-mayor-of-baltimore-md-1994.